Towns of Durham and Peterborough, NH
Twelve Municipalities File Formal Complaint with NH Bureau of Securities Regulation Citing
Discriminatory Local Government Center (LGC) Business Practices
Dissatisfaction with the New Hampshire Local Government Center’s proposal to “refund” more than $52 million in surplus funds that the NH Bureau of Securities Regulations hearings officer has ordered to be returned to NH municipalities and school districts has prompted a dozen municipalities to file a formal complaint with the NH Bureau of Securities Regulation.
The towns of Peterborough and Durham, along with ten other municipalities (Auburn, Bennington, Canaan, Greenfield, Henniker, Lyndeborough, Northfield, Plainfield, Raymond and Temple), have written a December 7, 2012 letter to Director Glennon of the NH Bureau of Securities pointing out that the LGC’s proposed refund through the issuance of future insurance premium “holidays” to current LGC members will not include those municipalities and school districts that contributed to the creation of the surplus funds, but that have recently left the LGC and taken their insurance business elsewhere.
Peterborough Town Administrator Pam Brenner and Durham Administrator Todd Selig state that the letter to the Bureau of Securities Regulation calls attention to the discriminatory effect of the LGC’s proposed refund that fails to return cash to the former LGC members. Ms. Brenner and Mr. Selig indicate that there are at least 20 NH municipalities and school districts that are in the same position as Peterborough and Durham: they were members of the LGC when the illegal surpluses were allowed to accumulate, but the reimbursement of a pro rata share of the surplus funds to these former LGC members is not being proposed by the LGC. This is patently unfair to local taxpayers from these communities whose annual insurance premiums to the LGC were utilized to amass significant illegal reserves by the organization, one of the largest public risk pools in the nation.
The New Hampshire Secretary of State’s Office, through the Bureau of Securities Regulation, argued LGC practices were illegal. They contended that the LGC was amassing money by overcharging cities, towns, and school districts for health insurance and not returning enough surplus to member communities. Hearing officer Donald Mitchell agreed. In August 2012, he ordered the LGC to return more than $52 million to communities.
The Order: What The LGC Has To Pay Back
$33.2 million from HealthTrust
$17.1 million the Property-Liability pool siphoned from HealthTrust
$3.1 million from Property-Liability for communities that joined after June 14, 2010
Total: $53.4 million
Selig, Brenner, and the other municipalities find the notion that communities, and more specifically local taxpayers, cannot receive a refund in cash and that entities have to be a continuing customer of the LGC organization to participate in the surplus refund to be an incredible and outrageous position. It is patently unfair to local taxpayers.
The municipalities have called upon Director Glennon and the Bureau to investigate this discriminatory refund proposal. Ms. Brenner and Mr. Selig state that it is common sense that since the LGC had an obligation to perform an audit and an actuarial analysis of the insurance programs, and then refund any surplus funds on an annual basis, the refund of funds should be calculated on an annual basis and credited to the members of these insurance program on an annual basis. The refund process must both be fair and transparent. Municipalities, school districts, and their employees were contributors to these insurance programs on an annual basis. The premiums were calculated on an annual basis, and the contributions to pay for the premiums were made on an annual basis. Each year, the identity of those municipalities and school districts that were members of the insurance programs changed.
These municipalities believe that after all of the problems with LGC programs that have been identified by the BSR, is it asking too much to have a plan to refund the surplus to the taxpayers of members communities, by year of participation, in cash? Is it asking too much to get the refund right so that taxpayers of communities that contributed to the illegal LGC surplus receive their fair share of the ordered refund?
Peterborough, Durham, and the other affected communities await a prompt response from the Bureau of Securities Regulation and the LGC on this important fairness issue.